Opening the curtain of May trading, the US dollar regained strength to rise after a decline at the end of last week due to profit taking activity.
The US dollar has indeed shown volatile movements since last week as investors prepare ahead of this week's FOMC policy meeting.
The Federal Reserve (Fed) is widely expected to raise interest rates by 25 basis points and a follow-up statement by Chairman Jerome Powell will be used as an indication of the next policy by investors.
Also of note is the release of US NFP employment data on Friday which will determine the health of the labor market in the world's giant economy.
Even so, investors will focus first on the release of manufacturing PMI data and the ISM survey services and private sector employment ADP data as indicators of NFP.
Manufacturing PMI data, which was published in the New York session yesterday, showed a slight increase from 46.8 to 47.1 in April, but the sector still contracted for six months in a row.
However, ISM manufacturing prices, which is a component that measures consumer inflation, rose above expectations from 53.2 compared to 49.2 last month, following an increase in the cost of raw materials.
As the market remains sensitive to rising inflation, it is seen as the reason for the strengthening of the US dollar in the previous session.
Turning to broader currency movements, the Aussie dollar traded steady ahead of the Reserve Bank of Australia's (RBA) policy meeting today.
The kiwi dollar rose slightly as investors also looked ahead to the release of New Zealand jobs data on Wednesday.
Meanwhile, the euro and pound traded little changed after sliding lower in the previous session with investors now focusing on European Zone inflation data on Tuesday and the European Central Bank's (ECB) policy meeting on Thursday.
Ahead of this busy and tumultuous week, investors remain cautious in positioning especially ahead of Fed and NFP interest rate decisions.
